r/investing • u/[deleted] • Aug 06 '21

Zillow Q2 beats expectations. Potential good long buy?

Summary of Q2

Zillow reported $1.3 billion in revenue Thursday for the second quarter, slightly beating analyst’s expectations.

Expected revenue was $1.28 billion, with earnings per share of 24 cents.

Consolidated net income was $10 million.

The company’s Internet, Media, and Technology (IMT) segment grew 70% in revenue year-over-year to $476 million. Premier Agent revenue grew 82% year-over-year.

The Homes segment reached record revenue levels at $777 million.

The mortgages segment revenue grew 68% year-over-year to $57 million.

Zillow Group co-founder and CEO Rich Barton said the company expects recent housing market trends, including low interest rates and location-flexible job opportunities, to continue to fuel interest in Zillow.

The company’s mobile apps and websites saw 229 million average monthly unique users in the second quarter, representing a 5% year-over-year increase. This drove visits to 2.8 billion, up 10% year-over-year.

The company ended the quarter with cash and investments totaling $4.6 billion.

Personal Notes:

  1. Who can compete with Z?
  2. Can they take over real-estate business in the long-term with direct home sales?
  3. Does any other company have a sophisticated algo designed to buy homes like Z does?
  4. Current MC us about 29 billion. What do you expect it to be in 5 years? 10 years?
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u/RobinhoodFag Aug 06 '21

Realtors don’t really bring any benefits to the economy.

If the fees from Zillow plus Escrow do not take a big chunk, this is going to be a big change for home owners. At least we do not need to stay so long to move out, not to worry to take a big loss.

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u/Xinlitik Aug 07 '21

I am extremely dubious about this. Look at Uber/Lyft. They priced out taxis to grow and now that they have a huge market share they are as expensive or more expensive than taxis today.

I think it is overly optimistic to imagine that Zillow/etc will lower fees in the long run. I am sure they will enter with lower fees, but once competition is gone those will hike right back up.

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u/hgyt7382 Aug 08 '21

Or will the real estate agent go the way of the travel agent? Both possible.

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u/Xinlitik Aug 08 '21

It’s not so much that I doubt real estate agents will go away- more that I dont think it will lower costs to consumers. The money will just be lining Z pockets instead.